Panasonic Not Committed to Tesla Giga Factory Deal?

There are reports circling the Internet saying that Panasonic “hasn’t committed to investing in a massive U.S. battery plant proposed by Tesla’s Elon Musk,” according to Bloomberg.

Tesla Giga Factory

Those reports even include quotes such as this one from Panasonic president Kazuhiro Tsuga:

“Our approach is to make investments step by step. Elon plans to produce more affordable models besides Model S, and I understand his thinking and would like to cooperate as much as we can. But the investment risk is definitely larger.”

So, are we to believe that Panasonic won’t commit to the Tesla giga factory deal? Absolutely not. Panasonic will commit when the time comes to make the commitment. Until then, Panasonic will do what corporations do. Deny the deal until it’s signed. Panasonic’s goal will be to get the best deal it can with Tesla on the giga factory. If Panasonic outright says it’s in, then the ball is in Tesla court.

Again quoting Panasonic president Kazuhiro Tsuga

“Our battery production depends on Tesla’s sales, so we have been closely monitoring them. We exchange our opinion on future sales on a monthly basis with Tesla.”

Panasonic depends on Tesla. Count Panasonic in on the Tesla giga factory deal, unless Samsung SDI can leverage its way in.

For Panasonic, this deal is likely do or die. Having withdrawn from several other of its previous operations, Panasonic almost solely relies on its lithium-ion battery sales to survive.

Tesla can raise capital at extremely low cost. Can they do it indefinitely? No, but if I understand it, they’re ~2bb of capital raise into a ~5bb factory. They recently had ~800mm of cash, and could move on w/o Panasonic. They have a 0.25% interest rate on one of the two notes, which appear to have found a market on their (low $300’s) convertibility. And even with conversion of bonds to stocks, the dilution I’ve seen reported by others, is only about ~5%. I’d verify these numbers before investing, but if true, they paint a picture of many options.

OK – so those who are too young to catch my movie quote spinoff – I’m not totally dissing Panasonic, they make a high quality product to be sure, but what I’m saying is that if they can’t commit, the Revenge Of The Electric Car must go on – with whatever, whoever will take the risk and exult in the rewards.

Apparently so. Tesla wants to eat free lunches, by crying out loud wherever it goes. Everyone is against it, it says.
Panasonic is a supplier, and it sees the demand forecast from much closer distance than we outsiders do. And obviously, Panasonic doesn’t see a demand deluge coming to justify the GIGAFARCE, as someone put it. Panasonic has abundant capacity to produce batteries. That’s what Panasonic president meant when he said “our battery production on Tesla’s sales”. If Tesla wants more, they will produce more batteries. He obviously couldn’t speak out teh truth on public media, that Enron Mask is lying about the rosy dreams he is showing investors. These people are often vague when making negative comments.

Speaking of crying out loud, you sure whine a lot. I just saw another post you made. What a whiner.

Tesla committing a lot of their own money on this. However, they also want to partner with Panasonic because Panasonic has experience manufacturing batteries. Panasonic can focus on batteries, and Tesla can focus on cars. It’s a common sense relationship.

Uhm… What? Honestly, if you were to do the slightest bit of research about Elon Musk, you’d be aware that is not the case. No one in modern industry has risked more than Elon Musk in the past ten years.

People keep calling him a billionaire. That’s not entirely honest. Yes, he started PayPal, and it was sold to eBay for 1.5 billion dollars. Elon only got around $200 million of that.

He then turned around and spent half of it to start his own space program.

Then, when it looked as if Tesla Motors was about to die, he dropped about 80 million bucks — of his own dough — to keep the company afloat.

His companies are now ‘worth’ billions perhaps… But he only recently became a billionaire himself.

If Panasonic, and everyone else, fails to help… Elon Musk will do it himself. Ever read ‘The Little Red Hen’…?

He’s a lot smarter than you give him credit for, as Eric pointed out. This is just to get as good a deal as he can.

Make no mistake: Panasonic is scared shitless about the gigafactory. If Tesla’s engineers can replicate their cells, then this division of Panasonic is going to take a massive cut in margins. Elon said the raw material cost is on the order of $60-70.

Panasonic wants one of two things to happen: 1) No gigafactory construction at all, so that they retain their current leadership
2) A substantial cut of profits in return for the investment/expertise.

Samsung can bear the loss from the Apple lawsuit and yet recover soundly with it’s uber-popular Galaxy products. Elon need not feel tied down to Panasonic. I don’t see any proprietary technology in the Panasonic cell that cannot be replicated or tweaked slightly ( perhaps vastly improved ) and mass-produced in a Gigafactory partly funded by a company that has more upside.

Somehow I don’t think that you are an accountant, Eric.
You claim:
‘Having withdrawn from several other of its previous operations, Panasonic almost solely relies on its lithium-ion battery sales to survive.’

It was older because that is the latest reports we have from Panasonic.

I prefer first hand data to someone’s unsourced resume, in this case Bloomberg.

It seems unlikely that in the interim Panasonic’s battery production for Tesla has increased from a comparatively small division to the largest in Panasonic, especially since whilst Tesla production has increased it has not increased to that extent.

But I don’t think you read the report correctly. It shows batteries in the Energy division, not automotive (see pg. 16).

Either way, your point stands. Tesla bought maybe 30,000 cars worth of batteries in 2013 and paid for maybe $20k of batteries for each. That’s only $600M in revenue for a company that had over 100x that in total sales.

The Tesla batteries are indeed reported in automotive. The batteries in the energy devision are for consumer and industrial uses. Different divisions. Note that when the 2 billion cell contract extension with Tesla and Panasonic was announced, it was posted on Panasonic’s Automotive division’s website, not their energy division’s site.

Elon Musk is not averse to risk. Twice in Tesla’s brief history it has been on the absolute brink of destruction. Twice, however ( Three times if you count the nasty early partner shakeups ), Musk has prevailed triumphant over what seemed insurmountable odds. Luck? Maybe a bit. Genius? Perhaps a dose or two of that. The victory of clean air we can breathe, and the evolution of the entire automobile industry is not something for the faint of heart. If Panasonic is counting pennies and cannot catch Elon’s vision – they can be replaced by someone who can. When and if this is pure posturing by Panasonic – taking a wait-and-see stance. The bus will pass them by. From what major manufacturers are saying currently about Tesla to the public as recently as today at the New York Auto Show – to what they may be saying in boardrooms behind closed doors, I’d say nearly every single automaker is taking the “wait-and-see” tack much too long. They’ve said they will watch and pounce on the technology once Tesla has proven it to be a big financial winner – that they are so big they can retool and knock Tesla… Read more »

For the same reason they keep building factories in China: to make more money.

Panasonic is just being cautious. Tesla has a new contract with Panasonic for increased supply and that hasn’t been fulfilled yet, Tesla isn’t yet selling in China or RHD markets and it doesn’t have the X finalized. There’s also a big build-out of Superchargers that’s supposed to be coming this year. Panasonic only needs 2 years to build cell manufacturing. Tesla also needs the next iteration of cell, so Panasonic still has work to do.

Every Leaf owner I know is simply salivating for an E Car or equivalent. It’s possible that one of the sleeping auto manufacturing giants may wake up and get serious about an “E” car for the proletariat. If I were Mr. Musk, I’d keep a sharp eye out, over his shoulder.